India's Balance of Payments Likely to Return to Surplus in FY27 as RBI Measures Boost Foreign Capital Inflows: SBI Research

The report stated that the Reserve Bank of India's measures announced in February and June 2026 should be viewed as a coordinated effort to stabilise the rupee, deepen the domestic debt market, attract more stable foreign capital and reduce friction in external funding. SBI Research said these initiatives are designed to strengthen India's external sector resilience while supporting long-term macroeconomic stability.

Despite the expectation that India will continue to record a current account deficit during FY27, the report noted that the deficit can be comfortably financed through fresh foreign currency inflows generated by the central bank's latest policy measures.

According to SBI Research, the overall Balance of Payments is projected to register a surplus of USD 5-10 billion in FY27. This marks a significant improvement over the institution's previous estimate of a USD 65-70 billion deficit. The report further projected that the current account deficit would remain in the range of 1.5-1.7 per cent of Gross Domestic Product during the financial year.

The report estimated that inflows through multiple channels could reach USD 55-65 billion in FY27. A substantial portion of these inflows, approximately USD 40-45 billion, is expected to come through the Foreign Currency Non-Resident (Bank) deposit route. SBI Research noted that banks can offer attractive deposit rates ranging between 5.5 per cent and 6 per cent under the scheme.

The report highlighted that the Reserve Bank of India's decision to exempt fresh Foreign Currency Non-Resident (Bank) deposits from Cash Reserve Ratio and Statutory Liquidity Ratio requirements, along with the central bank bearing hedging costs, has significantly enhanced the attractiveness of the deposit scheme.

In addition, the External Commercial Borrowing and Overseas Foreign Currency Borrowing swap window is expected to attract another USD 15-20 billion by encouraging fresh foreign currency borrowings and improving dollar liquidity across the financial system.

SBI Research stated that these projected inflows could substantially strengthen India's external account position, reinforce foreign exchange reserves and improve the Reserve Bank of India's ability to manage volatility in the currency market.

The report also pointed to positive implications for domestic banking liquidity. It estimated that banking system deposit growth could rise to around 14.5-15 per cent in FY27, compared with potential credit growth of 16 per cent, helping narrow the credit-deposit gap.

On Monday, the Reserve Bank of India issued four separate notifications covering commercial banks, small finance banks, rural co-operative banks and regional rural banks. Under these notifications, fresh Foreign Currency Non-Resident (Bank) deposits mobilised by banks have been exempted from Cash Reserve Ratio and Statutory Liquidity Ratio requirements to facilitate foreign currency inflows under the announced United States Dollar-Rupee swap facility.

The central bank clarified that the exemption would apply to fresh Foreign Currency Non-Resident (Bank) deposits with a minimum tenure of three years and a maximum tenure of five years raised up to September 30, 2026.

SBI Research concluded that stronger capital inflows, higher foreign exchange reserves and an improved Balance of Payments position could significantly enhance India's macroeconomic stability during FY27, even as the country continues to operate with a current account deficit.